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XEROX BLAMES SUPPLY CHAIN FOR WEAKENED CASH FLOW ?
Xerox has warned that costs incurred as a result of the earthquake in Japan have impacted on its operating cash flow.The document management company lowered its outlook for operating cash flow to a range of $2bn to $2.3bn for the year, down from a previous forecast of $2.5bn. The weaker outlook for operating cash flow saw the company’s share prices drop following the announcement.
Chief Executive Ursula Burns blamed the lowered cash forecast on supply problems in Japan and on new client accounts that require more upfront investment."We faced some unique challenges relative to cash usage during the first half of the year, including cash needs from ramping new contract signings and incremental cash required to support the supply chain constraints," Burns said on a call with analysts.
Xerox’s quarterly revenue, which rose 2% to $5.6bn, would have been higher had it not been for supply disruptions in Japan, the company said. The earthquake hurt revenue by putting constraints on its colour supplies, which are sourced from its Fuji Xerox plant in Japan.
The company, which competes with Hewlett-Packard, reportedly had about $1bn in cash at the end of the quarter, which it said it would use for "modestly sized acquisitions" and to buy back shares.
It expects to buy $700m of stock in the second half of the year.
Xerox’s profit rose 39% in the second quarter, to $327m, from $236 million, a year earlier.
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